Last updated on July 3rd, 2019 at 07:14 pm
The Milwaukee Bucks will pay for the maintenance and operation costs of the new arena proposed for downtown Milwaukee, according to the funding plan announced Thursday by Gov. Scott Walker and top state and local officials.
“In the framework announced, we agreed to take on the responsibility and risk associated with maintaining and operating a new arena so taxpayers aren’t responsible for those costs and liabilities, like with the current arena,” said Bucks spokesman Jake Suski.
In addition, Suski said the Bucks expect to collect the revenue from naming rights for the arena.
“Naming rights will be a critical revenue stream for us to meet the costs associated with operating the arena and maintaining a capital reserve fund,” he said.
Patrick Curley, chief of staff for Milwaukee Mayor Tom Barrett, said the Bucks commitment to pay for maintenance and operation costs of the new arena is a “significant” part of the deal.
State taxpayers are facing a liability of $120 million over the next 10 years for the BMO Harris Bradley Center, Walker said. That includes $20 million in debt and $100 million in deferred maintenance. The state is responsible for those costs because the Bradley Center was a gift to the state from Jane Bradley Pettit and the state was established as the financial backstop for the facility.
In 2009 and again in 2011, the state provided $5 million grants to pay for maintenance work at the Bradley Center.
The Bucks commitment to pay for maintenance and operations of the new arena, “gets state taxpayers out of the arena business,” said Steve Baas, vice president of government affairs for the Metropolitan Milwaukee Association of Commerce, which is a major supporter of the arena project. “It’s huge. It’s a very important part of this deal.”
If a new arena is not built and the NBA moves the team out of Milwaukee, the Bradley Center would lose its anchor tenant and major source of revenue adding to the difficulty of maintaining the building, Baas said.
The Bucks current owners and former owner Herb Kohl have agreed to pay for $250 million of the $500 million cost for the new arena. The deal announced Thursday proposes that the public would pay for the other half of the project. The state would pay $4 million per year for 20 years with a total state investment capped at $80 million. The city will provide $47 million, including $35 million for a parking structure and $12 million in tax incremental financing. The county will provide $4 million a year for 20 years through a state debt collection agreement. The Wisconsin Center District will provide $93 million through its existing hotel, car rental and food and beverage tax.
The Bucks will pay for any cost overruns in the construction of the arena.
Specific details of the how revenue from the arena will be distributed still need to be worked out, Curley said.
The Bucks owners have also said they plan to build $400 million in mixed-use development around the new area, including the vacant Park East corridor west of the Milwaukee River. Under that proposal the county would sell the Bucks ownership 10 vacant acres of land for $1.
The city is still working with the Bucks on a development agreement, Curley said. Part of those talks will determine what portions of the project are subject to property taxes. City officials want all of the development to be taxable except for the arena and for the parking structure that will be owned by the city, he said. City officials want bars and restaurants that are located inside the arena but are open even when no event is occurring there to also be subject to property taxes, he said.
The arena financing deal is subject to approval from the state Legislature and the Milwaukee Common Council. The sale of Park East land to the Bucks ownership group will be subject to approval by the Milwaukee County Board.